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Aegion (AEGN) to be Acquired by New Mountain for $963 Million

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Aegion Corporation recently entered into a merger agreement with the affiliates of New Mountain Capital, L.L.C. The transaction is valued at approximately $963 million. With the completion of the transaction — which is expected in the second quarter of 2021 — Aegion will become a private company. Aegion’s shares will no longer be listed on any public market.

Notably, shares of Aegion jumped 21% on the pre-market trading session on Feb 16, 2021, following the news release.

According to the agreement, all of Aegion’s outstanding shares will be acquired for $26.00 per share in cash, which marks a roughly 21% premium to Aegion's closing stock price last Friday, the final trading day before the deal was announced.

The transaction was approved by Aegion’s board of directors but is subject to the approval of its stockholders, regulatory approval and other customary closing conditions.

Stephanie Cuskley, Chairwoman of the Aegion board, said “We are pleased to reach this agreement with New Mountain, which is in the best interests of Aegion stockholders and enables them to realize immediate value at a significant cash premium for their investment.”

Aegion is one of the leading providers of infrastructure maintenance, rehabilitation and protection solutions in the United States. Meanwhile, New Mountain is a leading growth-oriented investment firm headquartered in New York. By combining Aegion’s existing strengths with New Mountain’s experience identifying and investing in high-quality growth businesses, Aegion is expected to boost its client offerings and technological capabilities through continued investments in its business.

Notably, post the completion of the deal, New Mountain will review the previously-announced sale process for Aegion’s Energy Services segment.

Upcoming Results & Price Performance

Aegion intends to announce fourth quarter and fiscal 2020 earnings results on Mar 10, 2021. The company expects adjusted EPS for the quarter to be slightly below the year-ago level. This is mainly due to typical seasonal revenue reductions in Infrastructure Solutions. In the Infrastructure Solutions unit, revenues are expected to drop 5-7% year over year. Excluding the impact of exited or to-be-exited operations, revenues are likely to be flat to slightly up from the prior year. Adjusted operating margins are projected to grow 50-100 basis points from the prior-year figure.

Over the past six months, shares of the company have soared 55.3%, compared with the industry’s 19.3%. The company has been benefitting from its North America business, and increased focus on strategic initiatives and technological enhancement efforts.

Zacks Rank & Key Picks

Aegion currently carries a Zacks Rank #3 (Hold).

Some of the better-ranked stocks in the Zacks Building Products - Miscellaneous industry are TopBuild Corp. (BLD - Free Report) , Owens Corning Inc. (OC - Free Report) and Masco Corporation (MAS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TopBuild has an expected earnings growth rate of 23.1% for 2021.

Owens Corning’s 2021 earnings are expected to grow 24.6%.

Masco has an expected earnings growth rate of 7.7% for 2021.

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